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NEW DELHI: The rupee dropped 23 paise to hit its lowest level against the US dollar since August 2013, at 68.61 in early trade on Wednesday amid weak cues from Asian currency markets.

The domestic currency had lost 32 paise to close at 68.38 on Tuesday, after hitting an intraday low of 68.43, as the Reserve Bank of India (RBI) was said to have intervened in the market to check a drastic fall in the currency.

On Wednesday, the dollar index, which tracks the movement of the greenback against a basket of six major world currencies, stood at 96.87.

Most Asian currencies were trading lower. The Malaysian ringgit depreciated 1.25 per cent against the greenback to 4.15. The Indonesian rupiah, the Korean won and the Taiwanese dollar fell 0.85 per cent, 0.54 per cent and 0.51 per cent, respectively. The Thai baht fell 0.14 per cent, while the Chinese yuan was down 0.09 per cent.

"On the currency front, there is a lot of stress and there is a possibility that dollar-rupee can go higher from here. However, we have seen a trend from 2014 May onwards, in which the dollar-rupee weekly graph has stayed in a trend channel. And it has been holding nicely for quite some time," said Bhaskar Panda, HDFC Bank.

"I do not believe that is going to break in the immediate future. Therefore the depreciation would be there, but it would be gradual and would probably be controlled by the central bank," Panda said.

The volatility in the currency market is expected intensify thanks to the fall in the Chinese yuan. The lack of consensus on crude production cut among the Opec members could trigger foreign outflows from emerging markets. This may hurt the dollar-rupee exchange rate.

Traders believe that the rupee may soon test the record low, with one-month non-deliverable forwards already trading at 69.

Meanwhile, the one-month implied volatility of the currency touched a six-month high of 7.74 percent. It was 7.05 percent on Tuesday.

But traders were hoping India's sturdier economic fundamentals than in 2013 and foreign exchange reserves of near a record $355 billion could help reduce some of the concerns, though much would depend on how the (RBI) responds, PTI said.